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Good day and welcome to the Texas Instruments 1Q16 Earnings Release Conference.

At this time I would like to turn the conference over to Dave Pahl. Please go ahead.

Dave Pahl

Good afternoon and thank you for joining our first quarter 2016 earnings conference call. As usual, Kevin March, TI's Chief Financial Officer, is with me today.

For any of you who missed the release, you can find it on our website at ti.com/ir. This call is being broadcast live over the web and can be accessed through our website. A replay will be available through the web as well.

This call will include forward-looking statements that involve risks and uncertainties that could cause TI's results to differ materially from management's current expectations. We encourage you to review the notice regarding forward-looking statements contained in the earnings release published today, as well as TI's most recent SEC filings, for a more complete description.

I'll start with a quick summary. Revenue for the quarter was in the upper half of our expected range. Compared with the year ago, notable market activity for our products included continuing strength in automotive as well as improvement in the industrial and communications equipment. Revenue was down 5% due to the weakness in personal electronics market, which declined as expected. Our core businesses of analog and embedded processing comprised 87% of first quarter revenue. Analog revenue declined 8%, while embedded processing revenue grew 8%.

Earnings per share were $0.65.

With that backdrop, Kevin and I will move on to the details of our performance which we believe continues to be representative of the ongoing strength of our business model.

In the first quarter, our cash flow from operations was $547 million. We believe that free cash flow growth, especially on a per share basis, is most important to maximizing shareholder value in the long term. Free cash flow for the trailing 12-month period was $3.7 billion, up 1% from a year ago. Free cash flow margin was 28.4% of revenue, up from 27.3% a year ago and consistent with our targeted range of 20% to 30% of revenue. We continue to benefit from our improved product portfolio and the efficiencies of our manufacturing strategy, the latter of which includes our growing 300 millimeter analog output and the opportunistic purchase of assets ahead of demand.

We believe that free cash flow will be valued only if it's returned to shareholders or productively invested in the business. For the trailing 12-month period, we returned $4.2 billion of cash to our investors through a combination of dividends and stock repurchases.

Analog revenue decreased 8% from a year ago. The decline was primarily due to high volume, analog and logic. Power management and high-performance analog also declined, while Silicon Valley analog grew.

Embedded processing revenue increased 8% from a year ago due to growth in all three product lines, led by processors. Our investments in embedded are translating into tangible results as this quarter's revenue is a record.

In our other segment, revenue declined 10% from a year ago, primarily due to custom ASIC products.

Compared with a year ago, distributor resales decreased 4% due to lower demand and personal electronics that I described earlier. Inventory increased a couple of days to about 4-1/2 weeks. We believe this inventory level continues to reflect an environment of good product availability due to healthy TI inventories and stable lead times, which, together, drive high customer service metric. As a reminder, inventory in our distribution channel has decreased over the past few years because of our consignment program.